a. After the bitter experiences before and during the Second World War, Japan
has committed itself to contributing to Asian peace and development by playing a
positive political and economic role, and it has been a major pillar of Japanese
foreign policy to improve relations of friendship and good-neighborliness. An
Asian country itself, Japan finds its own prosperity inexorably linked to Asian
peace and development.

The other Asian countries have increasingly high expectations toward Japan as
an Asian industrialized country, and it is important that Japan respond to these
expectations by contributing positively to Asian peace and development.

b. Japan had exhausted most of its resources and energy in the Second World
War, and it was not until after the signing of the San Francisco Peace Treaty
that the Allied occupation was ended and Japan was able to resume diplomatic
relations with the other countries of Asia and the rest of the international community.
Japan regained full sovereignty only with the coming into force of the San
Francisco Peace Treaty in April 1952. Although this Peace Treaty was signed by
Cambodia, Ceylon (now Sri Lanka), Laos, Pakistan, the Philippines, and Vietnam,
the other Asian countries of Burma, India, and Indonesia signed separate
bilateral peace treaties with Japan. The San Francisco Peace Treaty also
recognized the independence of Korea.

Although China was not a party to the San Francisco Peace Treaty, peace
between China and Japan was restored with the "Treaty of Peace between
Japan and the Republic of China" in 1952. (As a result of the normalization
of relations between Japan and China in 1972, this treaty lost the basis for its
existence and ceased to be effective.)

c. Indemnifications were an important issue that had to be solved if Japan was
to be restored to full membership in the postwar international community. It was
imperative that Japan compensate the countries of Asia for the losses and
suffering inflicted on them during the war if Japan, repentant over past wrongs,
was to establish and develop new relations of friendship and cooperation with
these countries. Realizing this, Japan concluded reparations agreements with the
four countries of Burma, Indonesia, the Philippines, and Vietnam.

B. The Korean Peninsula

The end of the war ended 36 years of Japanese administration on the Korean
Peninsula and the establishment of the government of the Republic of Korea in
the south and the north Korean government in the north was announced
respectively. After the San Francisco Peace Treaty went into effect, Japan
recognized the Republic of Korea and began negotiations toward the establishment
of diplomatic relations with that country. Although these negotiations were very
difficult, the two sides' determination to establish diplomatic relations
resulted in the opening of diplomatic and consular relations between Japan and
the Republic of Korea fourteen years later in December 1965 and the simultaneous
conclusion of fisheries, economic cooperation, cultural, and other agreements.

The first Japan-Republic of Korea Regular Ministerial Conference was held
in 1967, and Ministerial Conferences have been held in principle every year
since then alternating between Tokyo and Seoul. Working-level meetings have
also been held between the two governments in various fields, including trade,
agriculture and fisheries, industrial technology, cultural exchange, and the
treatment of Koreans resident in Japan, and close cooperative relations have
been established.

Trade between Japan and the Republic of Korea increased sharply after the
normalization of diplomatic relations, and the total two-way trade in 1984 was
$11.44 billion, approximately 52 times the 1965 level.

Relations between Japan and the Republic of Korea have become close not only
at the governmental level but also in a broad range of trade, economic, and
other relations between people in all walks of life. Even though the
relationship has not been entirely trouble-free, as seen in such problems as
economic cooperation anal textbook issue, Japan and the Republic of Korea have
firmly maintained friendly and cooperative relations. The historical exchange of
visits between the heads of government of the two countries achieved when Prime
Minister Nakasone visited the Republic of Korea in January 1983 and President
Chun Doo Hwan visited Japan in September 1984 as the first incumbent Korean head
of state ever to visit Japan was symbolic of the way relations have developed
between Japan and the Republic of Korea over the forty years since the end of
the war. As a result of this, the relations of eternal good-neighborliness,
friendship, and cooperation between Japan and the Republic of Korea as mature
partners have been consolidated from the global perspective.

It goes without saying that this relationship of friendship and cooperation
between Japan and the Republic of Korea is fundamental to Japanese policy toward
the Korean Peninsula. Yet the fact remains that north Korea exists to the north
of the ceasefire line and that a state of confrontation has continued between
north and south ever since the end of the Korean War. Believing that the
problems concerning the Korean Peninsula should be peacefully solved through
direct dialogue between north and south, the government of Japan is working to
create a climate conducive to such a solution, and as for the relations with
North Korea, has maintained private-sector contacts in trade, economic,
cultural, and other fields in line with this basic policy vis-a-vis the
Koran Peninsula.

C. China

Although there were private-sector contacts between Japan and the People's
Republic of China after the war, the harmonization of relations between the two
was not realized until the Japan-China Joint Communique of September 1972.
Ever since, Japan has made the maintenance and development of good and stable
relations with China one of the main pillars in its foreign policy and has
sought further improvement in this relationship. Thus it was that the two
countries signed agreements on trade, aviations, marine, and fisheries between
January 1974 and August 1975 and the Treaty of Peace and Friendship between
Japan and the People's Republic of China in 1978. The signing of this treaty and
other agreements soon had a major impact on cross-visits, and there have been
frequent visits back and forth by high government officials and other people,
including the heads of government of the two countries. In 1983, Chinese Communist
Party General Secretary Hu Yaobang visited Japan and agreed with Prime Minister
Nakasone on adding the principle of mutual trust to the three principles (peace
and friendship, equality and mutual benefit, and long-term stability)
suggested earlier by Premier Zhao Ziyang to govern Japan-China relations and
agreed on the establishment of the Japan-China Committee for the 21st Century.
In March 1984, Prime Minister Nakasone Korea in trade visited China and held a
frank exchange of views with the Chinese leadership on ways to further develop
relations between the two countries in line with these four principles.

Realizing that good and stable relations between Japan and China contribute
not only to the two countries themselves but also to peace and stability
throughout Asia and the world, Japan will continue to cooperate positively with
China.

D. Southeast Asia and Burma

a. National independence movements swept across Southeast Asia after the war
and numerous new countries gained independence. Many of these countries began
attaching increasing importance to mutual cooperation for achieving political
and ideological goals in the 1950s, as seen in the 1955 Bandung conference of
Asian and African nations.

b. Following that, and with the strong support of Japan and other countries,
there were active moves in the mid-1960s for regional cooperation centered on
promoting economic development within the region, as seen in the Ministerial
Conference for the Economic Development of Southeast Asia and other efforts, and
in August 1967 the five countries of Indonesia, Malaysia, the Philippines,
Singapore, and Thailand joined together in the Association of Southeast Asian
Nations (ASEAN) to promote peace and prosperity in Southeast Asia. Although
ASEAN put its initial emphasis on promoting economic, social, and cultural
cooperation within the region, political coordination also had to be
strengthened to deal with the unstable situation in Indochina and ensure
regional security. In January 1984, Brunei joined ASEAN to bring the membership
to six, and ASEAN is today taking a united position on the Cambodian problem,
international economic issues, and other issues of concern.

c. There has thus been considerable progress made in regional cooperation
centering on ASEAN, but the situation in Indochina remains unstable.

Although there was a lull in the fighting in accordance with the 1954 Geneva
Accords, when the three countries of Indochina achieved independence after their
long struggle against France, the fighting continued in the Vietnam War and the
conflicts in Cambodia and Laos.

In all of these struggles in and among the three countries of Indochina, the
United States on the one hand, and China and Soviet Union on the other,
supported their respective clients and relations among the three outside
countries were reflected in the situation in Indochina. Yet with the signing of
the Paris Peace Accords of 1973, the United States withdrew from Vietnam, and
approximately two years later, in 1975, socialist governments were in power in
all three Indochinese countries as Phnom Penh and Saigon fell one after the
other and a leftist faction gained control in Laos.

The next year, 1976, Vietnam was unified. Although it had been expected
during the Vietnam War that the end of the war would see close cooperation among
the three Indochinese countries, there was a rapid deterioration in relations
between Vietnam and Cambodia reflecting the deterioration in relations between
the Soviet Union and China as Vietnam moved closer and closer to the Soviet
Union and Cambodia was supported by China. Vietnam invaded Cambodia in 1978,
driving the government of Democratic Cambodia out of Phnom Penh and establishing
"the People's Republic of Cambodia" in January 1979. There has been
continuous fighting between the Vietnamese in Cambodia and the Democratic
Cambodian forces ever since, and relations between Vietnam and China have become
relations of confrontation as China moved against Vietnam in February 1979. The
situation in Indochina continues to cast a cloud over Southeast Asian peace and
stability.

d. With the development of ASEAN and the continuing conflict in Indochina,
Japan's basic policy toward Southeast Asia is one of striving to contribute to
the establishment of that peaceful coexistence between the ASEAN countries and
the Indochinese countries that is essential to peace and stability in Southeast
Asia. Japan thus has continued to strengthen its relations with the ASEAN
countries and sought to undertake positive diplomacy toward the countries of
Indochina since the end of the Vietnam War and to contribute to the creation of
a climate conducive to the solution of the Cambodian issue through dialogue with
all parties concerned.

e. Realizing that ASEAN stability and development is a major force for
stability in Southeast Asia and all of Asia, Japan has worked to maintain and
develop close relations with the ASEAN countries in the entire range of trade,
investment, economic cooperation, and other fields.

f. Relations between Japan and Burma have been good ever since their
establishment in 1954, and understanding between the two countries has recently
been further promoted as with the July 1984 state visit to Japan by President
San Yu.

E. Southwest Asia

a. Most of the countries of Southwest Asia were under British control until
the Second World War (with the exception of Nepal and Bhutan, both of which were
independent even before the war), but the end of the war brought them
independence. The British Crown Colony of India, for example, was divided into
India and Pakistan and declared independent in August 1947.

Since its independence, India has been a leading voice in the Third World,
consistently maintaining a position of non-alignment and promoting the five
peace principles with China.

India maintained good relations with China for many years after independence,
but large-scale hostilities broke out between the two countries in 1962 over
territorial claims.

Relations between India and Pakistan have been strained since the beginning
over the issue of sovereignty over Jammu and Kashmir, and there were armed
conflicts in 1947, 1965, and again in 1971. The 1971 conflict was sparked by the
drive for independence for East Pakistan, with the upshot that East Pakistan
became independent as Bangladesh.

Although the Southwest Asian region has thus been somewhat fragmented, there
have recently been moves for regional cooperation among the seven countries of
the area.

b. Facing on the Indian Ocean, Southwest Asia is an extremely important
region linking the Middle East and East Asia.

Believing that developments in this region affect peace and stability in Asia
and the world, Japan has extended vigorous economic and technical cooperation to
the Southwest Asian countries, worked to enhance its friendly and cooperative
relations with them, and thus contributed to the region's stabilization. Japan
has especially worked to promote political dialogue with the countries of the
region since the Soviet military intervention into Afghanistan, and this process
was given a major boost when Prime Minister Nakasone visited Pakistan and India
in the end of April and the beginning of May 1984, the first visit by a Japanese
Prime Minister to these countries in twenty-three years, and held useful
exchanges of views with President Haq and the late Prime Minister Indira Gandhi
on international political and economic issues. Prime Minister Nakasone and
Foreign Minister Abe attended the funeral services for Prime Minister Gandhi in
November 1984 and had the opportunity for discussions with, inter alia, Prime
Minister Rajiv Gandhi as well as the heads of government of Pakistan, Sri Lanka,
and Bangladesh.

These top-level discussions served to further strengthen
Japan's relations of friendship and cooperation with the countries of Southwest
Asia and to consolidate the foundations for contributing to Asian peace and
prosperity.

F. Japan's Foreign Policy Stance in Asia

a. As may be seen from the above outline, the postwar situation in Asia has
been very complex, and a number of points need to be borne in mind as
contributing to Asian stability.

First is the fact that many of the developing countries of East Asia have
achieved striking economic growth in recent years. It is fully expected that
this development will continue, and it is reasonable to expect that this
economic vitality will be an important long-term factor contributing to the
prosperity of the Asian region and hence to peace and stability.

Second is Chinese foreign policy. Determined to achieve its four
modernizations and to increase agricultural and industrial output fourfold by
the end of this century, China is experimenting with radical economic reforms
and aggressively opening its doors to outside economic influences. Peace in the
vicinity is one of the most important prerequisites for China's efforts for
solid economic development, and it is only natural that Chinese foreign policy
efforts should be directed toward the creation of a stable and peaceful
international environment which will enable China to concentrate on economic
development. This Chinese foreign policy is a very important factor for peace
and stability not only for neighboring countries but for all of Asia and the
world.

Third is the development of ASEAN. Strengthened unity among the ASEAN
countries, and hence the strengthening of ASEAN as a regional organization, is
extremely important to peace and stability in Southeast Asia overall. The
joining of the newly independent nation of Brunei in January 1984 has enhanced
ASEAN's development as an even more stable organization for regional
cooperation, and the promotion of ASEAN regional cooperation is highly
significant for peace and stability in all of Asia. However, there are a number
of destabilizing factors in Asia, including the standoff between north and south
on the Korean Peninsula, the tense relations between China and Vietnam, and the
protracted problem of Cambodia. This situation is further complicated by the
recent strengthening of the Soviet military presence in Asia. While it cannot be
denied that some of these problems have aspects linking them to East-West
relations overall, none of them can be solved solely in the context of East-West
relations.

Japan's foreign policy stance for Asia must therefore be basically one of
doing everything it can to contribute to Asian stability and development and,
while doing its utmost to lessen destabilizing influences, working to create a
climate conducive to the solution of these various problems.

b. Despite their numerous domestic problems and the buffeting they have taken
in the international arena, the Asian countries have made solid progress in
their social and economic development since the war. Although it will not be
easy to eliminate the destabilizing influences and achieve political stability
in this region, it is reasonable to assume in light of their achievements to
date that their great development potential will be further enhanced through the
wisdom and hard work of their people.

This is especially true of the Asia-Pacific region, which has achieved the
most dynamic development in the world, and the entire international community is
watching as this region takes on increased political and economic importance.

All of the countries of this region are looking to Japan to play a role for
Asian peace and prosperity commensurate with its position as a free and
democratic country and an Asian nation, and it is now more important than ever
before that Japan make every effort to that end.

2. Oceania

A. Historically, relations between Japan and the countries of Oceania are a
relatively new, yet there has been striking development in these relations in
the forty years since the end of the war.

Relations between Japan and Australia have grown steadily and become closer
since the 1952 San Francisco Peace Treaty, and the Agreement on Commerce between
Japan and Australia signed in 1957 laid the foundation for subsequent
development. It was also in the late 1950s that Australia's abundant mineral and
energy resources were first discovered and developed, and trade between the two
countries has expanded sharply in a mutually beneficial and interdependent
pattern of Japan's importing Australia's abundant mineral and energy resources,
agricultural, forest, and marine products, and other resources and exporting
finished manufactured goods. (The total two-way trade of approximately $12.5
billion in 1984 was about 30 times the approximately $400 million trade at the
time of the signing of the Agreement on Commerce.) In 1976, the Basic Treaty of
Friendship and Co-operation between Japan and Australia was signed in
recognition of the importance of these interdependent and complementary trade
relations and in the hope of broadening the relationship to political,
scientific, social, cultural, and other fields. Japan and Australia have thus
continued to develop their friendly and cooperative relations as Asia-Pacific
industrialized democracies and as important trading partners for each other.

Relations between Japan and New Zealand developed after the war centered on
trade and economic relations. With the complementary nature of the two
countries' industrial structures, there has been steady growth in Japan-New
Zealand trade since the signing of the Agreement on Commerce between Japan and
New Zealand in 1958. This relationship was further strengthened when New Zealand
shifted from its British-oriented stance to a policy of emphasizing relations
with the Asia-Pacific countries when Britain joined the European Common Market
in 1973. Today, relations between Japan and New Zealand are not limited to the
trade and economic fields but extend to active personal exchanges and close
relations in the political and cultural fields as well.

Relations with the island countries of the South Pacific entered anew era
with these countries' independence in the 1960s and beyond. While working for
national development as newly independent countries, these countries have also
sought to promote regional economic and social development cooperation in the
South Pacific Forum and other regional organizations. Valuing its relations with
these countries, Japan has been active in grant aid, technical cooperation, and
other economic cooperation designed to support their own bootstrap efforts.

B. The Asia-Pacific region has drawn worldwide attention in recent years
for its economic dynamism and potential for world economic vitality, and Japan's
relations with the countries of Oceania have drawn still closer.

It was in this context that Prime Minister Nakasone visited the countries of
Oceania in January 1985, the first Japanese Prime Minister to visit these
countries in five years, and solidified the bases for close cooperation between
Japan and these countries looking ahead to the 21st century. This visit by Prime
Minister Nakasone was highly significant in broadening the scope of Japanese
foreign policy by strengthening the partnership with Australia and New Zealand
and promoting the relations of friendship and cooperation based upon improved
mutual understanding with Papua New Guinea and Fiji. Maintaining the momentum
generated by the Prime Minister's tour of Oceania, Japan will continue to lend
every effort to further improving friendly relations with the increasingly
important countries of this region.

3. North America

A. The United States

a. Postwar Japan-United States relations began with the United States the
occupying power and Japan the occupied country. It was during this time that the
Constitution of Japan was promulgated (in 1947) and the basic framework for
postwar Japanese society was constructed. At the time the San Francisco Peace
Treaty was signed in 1951, East-West discord was intensifying. Japan chose to
sign the Treaty of Mutual Security and Cooperation with the United States, with
whom Japan shares the basic values of freedom and democracy, and to secure its
own peace and security in close cooperation with the United States.

b. Following the restoration of Japanese sovereignty in 1952, Japan set about
normalizing relations with other countries and dealing with the aftermath of
war. In relations with the United States, this period saw the signing of the
Japan-United States Treaty of Friendship, Commerce, and Navigation in 1953,
the return of the Amami Islands to Japan also in 1953, the conclusion of the
current Japan-United States Security Treaty in 1960, the reversion of the
Ogasawara Islands to Japan in 1968, and the reversion of the Okinawan Islands to
Japan in 1972.

c. In the meantime, Japan achieved striking economic growth, its GNP growing
from $44.9 billion at the beginning of the rapid-growth 1960s to $196.2
billion at the end. Trade between Japan and the United States also changed,
shifting to a pattern of Japanese export surpluses in 1965 and beyond. Yet it
must be remembered that among the underlying factors behind this Japanese growth
were the fact that Japan was guaranteed of its basic peace and security within
the framework of the security arrangements with the United States and the fact
that, with the cooperation of the United States and other countries, Japan was
able to benefit from its smooth entry and participation in the postwar free-trading
system based upon the GATT and the IMF. At the time, the Japan-United States
relationship was described as one between, to use the 1961 wording, "equal
partners."

d. Going into the 1970s, Japan continued its rapid economic growth, becoming
the second-largest free-market economy in the world and accounting for
approximately 10% of the total world GNP, and the international community came
increasingly to expect Japan to play an international role commensurate with its
status. The relationship between Japan and the United States developed from a simple
bilateral relationship to one between two countries cooperating to fulfill their
global political and economic responsibilities, and the relationship came to be
described as "Japan-United States relationship, or Japan-United States
cooperation from the global perspective."

e. Japan's decision to be a party to the political declaration at the 1983
Williamsburg Summit stating that "the security of the participating
countries is indivisible", as well as the Japanese response to the downing
of the Korean Airlines jetliner in the autumn of the same year, demonstrated
Japan's commitment to the pursuit of the goals it shares with the United States
and the other Western democracies. These events vividly demonstrated the global
nature of the Japan-United States relationship.

f. The November 1983 visit to Japan by President Reagan was highly
significant in highlighting the global importance of Japan-United States
cooperation and further strengthening the friendship and trust between the top
leaders of the two countries. Seeking to conduct the necessary follow-up to
resolve specific economic issues in a manner satisfactory to both sides, the
United States established a management group headed by Vice President Bush and
Japan made arrangements whereby Prime Minister Nakasone would be in overall
charge, Foreign Minister Abe would coordinate contacts with other countries, and
Economic Planning Agency Director General Toshio Komoto would play a central
role in dealing with external economic issues as head of the Ministerial
Conference for Economic Measures. In this follow-up process, Foreign Minister
Abe traveled to the United States in January 1984 and held exchanges of views
with United States officials, with the result that the Nippon Telegraph and
Telephone Public Corporation (NTT) procurement agreement was extended for
another three years and the framework was laid for making every effort to
resolve pending issues over the next two or three months.

Vice President Bush subsequently visited Japan, on his way to India and the
Middle East, to work on follow-up. In Japan, Vice President Bush marked the
end of the immediate follow-up efforts initiated with President Reagan's visit
to Japan by indicating that the overall Japan-United States relationship is
far more important than any specific issue and that the United States government
highly appreciates the efforts which the government of Japan has made to resolve
these problems. Yet at the same time, there were a number of problems remaining,
including tariff reductions for wine, paper products, lumber, and other items,
the liberalization of Japan's capital markets, and the internationalization of
the yen. These were mainly dealt with the decision made shortly after Vice
President Bush left Japan to lower tariffs on wine and paper products and the
late-May report of the Japan-United States Yen/Dollar Committee setting
forth specific measures for the liberalization of Japan's capital markets and
the internationalization of the yen.

g. Subsequently, in a period of continued economic recovery, President Reagan
was reelected on November 6 with overwhelming public support, carrying 49 of 50
states.

h. Realizing that the year 1985 is seeing potentially important developments
in the relationship between the United States and the Soviet Union, so crucial
to world peace, and that the Japan-United States relationship is now more important
than ever, Japan and the United States held a summit meeting in Los Angeles in
January 1985. In the press remarks by Prime Minister Nakasone after the summit
meeting, it was confirmed that the two leaders had established the framework for
dynamic cooperation in the cause of world peace and prosperity based upon the
three mainstays of Japan-United States trust, responsibility, and friendship.
It was also stated that Japan fully supported President Reagan's efforts for
arms control negotiations with the Soviet Union.

These press remarks also highlighted the importance of further promoting the
dynamic development seen in the Asia-Pacific region. At the same time, they
described the September 1984 report of the United States-Japan Advisory
Commission "Challenges and Opportunities in United States-Japan
Relations" as an important contribution to the relationship and fully
deserving of serious study by both sides.

i. Accompanying Prime Minister Nakasone to the United States in January,
Foreign Minister Abe stopped in Hawaii on the way back from the United States
and attended the reception marking the kickoff of ceremonies commemorating the
100th anniversary of the start of government-endorsed Japanese immigration to
Hawaii.

j. Also in the Japan-United States summit, President Reagan explained to
Prime Minister Nakasone that his proposed Strategic Defense Initiative (SDI) is
non-nuclear and defensive in nature and is ultimately intended to make
possible the complete elimination of all nuclear weapons. Prime Minister
Nakasone expressed his understanding of this SDI research. At the Japan-United
States summit held on the occasion of the Bonn Summit, Prime Minister Nakasone
reaffirmed Japan's basic position and confirmed five points regarding SDI with
President Reagan, such as that the aim of SDI is not to achieve superiority or
unilateral advantage over the Soviet Union. (The full five points confirmed
between Prime Minister Nakasone and President Reagan were that SDI's aim is not
to achieve superiority or unilateral advantage over the Soviet Union, that SDI
should form an integral part of deterrence of the West as a whole and should
contribute to maintaining and enhancing it, that SDI should aim at substantial
reductions in offensive nuclear weapons, that the ABM Treaty should not be
violated, and that development and deployment should be preceded by
consultations with the allies and negotiations with the Soviet Union.) In late
March, in a letter to Foreign Minister Abe, United States Secretary of Defense
Weinberger invited Japan, as well as the NATO countries and other allies, to
participate in SDI research program.

B. Canada

a. Based upon their complementary economic structures, relations between
Japan and Canada have made striking progress in the postwar years, particularly
in the economic and trade fields. These relations have grown especially close in
recent years not only in the economic field but also in the broad range of
fields including politics, economic cooperation, and cultural relations. It is
hoped that this relationship between mature industrialized democracies will
continue to develop at all levels. As members of the group of western countries
sharing the same political and economic values, Japan and Canada are important
partners striving for common goals in the interna tional community. Thus it is
hoped that the two countries will work even closer together in pursuit of such
shared goals as promoting arms control, alleviating the North-South disparity,
and preserving and strengthening the free trading system.

b. The year 1984 saw continued official visits and consultations between
Japan and Canada. In July 1984, Deputy Prime Minister and Secretary of State for
External Affairs Chretian in the Liberals government of Prime Minister Turner
carne to Japan for the Fourth Japan-Canada Foreign Ministers' Meeting with
Foreign Minister Abe, and in December Secretary of State for External Affairs
Clark came to Japan on behalf of the new Progressive Conservative government to
explain its diplomatic policies and exchange views with Foreign Minister Abe and
other Japanese government officials. Among the provincial governors who came to
Japan in 1984 were Premier Levesque of Quebec and Premier Pawley of Manitoba. At
the working level, consultations were held with Canada on fisheries in February,
United Nations affairs in November, and science and technology in December.

4. Latin America

A. Latin America has a population of 360 million and includes 33 independent
countries, among them many newly industrializing countries with relatively high
income levels. It is a vast area rich in natural resources and human potential
with great promise for the future. Latin America's political and economic
standing in the international community has risen sharply in recent years.

B. Relations between Japan and the Latin American countries have been
characterized by traditionally good political relations and complementary
economic relations joining Latin America's wealth of natural resources with
Japanese industrial and technological prowess, and the countries of Latin
America have come to hold increasingly strong expectations of cooperation with
the strong Japanese economy in promoting their own economic and social
development. The nearly one million people of Japanese ancestry and nationality
in Latin America play an important role in promoting friendly relations with the
countries of that region.

Following on the heels of the approximately 250,000 Japanese who emigrated to
Latin America before the war, there have been another 100,000 people emigrating
to Latin America since the war, starting with the 1952 emigrations to Brazil's
Amazon area, and peaking out at 1960's 8,300.

C. Economic relations between Japan and Latin America have grown steadily
since the war as Latin America has become an important supplier of natural
resources. Japan-Latin America trade grew by an average of 15% per annum in
the 1960s and 19% per annum in the 1970s. As a result, the total two-way trade
has grown from $600 million in 1960 to over $10 billion in 1979 and marked a
record $17.2 billion in 1981. In addition to this traditional trading
relationship, Latin America has also become increasingly important as a field of
operation for Japanese private-sector investors. Japanese investment in Latin
America grew sharply in the 1970s. It now (as of March 31, 1984) stands at a
total of 17.5% of all direct Japanese overseas investment, making this the third-most
important region after North America and Asia. Likewise, Japanese banks have
been aggressively expanding their lending to Latin America since the 1970's, and
Japan is now the second-largest (after the United States) lender to Latin
America.

D. Japanese economic and technical cooperation with Latin America has
expanded year after year, and Japanese government cooperation is characterized
by a strong tilt to technical cooperation in light of the fact that the Latin
American region includes so many newly industrializing countries. The bulk of
the economic cooperation, however, is based on non-governmental cooperation
such as export credits.

E. While there has been an increase in personal contacts including cross-visits
by high government officials and more active exchanges in cultural, scientific
and technological, and other fields, it is important that efforts continue to be
made to structure a broad-based relationship.

Within this context, Foreign Minister Abe visited Mexico in September 1984
and Columbia in January 1985, and Japan welcomed Brazilian President Figueiredo
as a State Guest in May 1984 and the Foreign Ministers of Paraguay and Honduras
in July, the Foreign Ministers of Costa Rica and Argentina in December, and
President-elect Barletta of Panama in July as guests of the Foreign Ministry.
In addition to these exchanges of high-level visits, Japan is continuing its
foreign policy efforts to build broad-based relations with these countries in
cultural, scientific and technological, and other fields.

F. On the very fluid situation in Central America, Foreign Minister Abe took
advantage of the occasion of his visits to Mexico and Columbia to reaffirm
Japan's strong support for the efforts of the Contadora Group and other
countries in the region for a peaceful solution and to clearly indicate the
Japanese position to tackle those problems important to the peace and stability
of the region.

G. Latin American countries continue to face serious economic difficulties.
Although it has been possible to stave off a crisis situation in the debt
problem with the multiyear reschedulings by the private bank consortiums, the
support of the IMF and the governments of the lending countries, and the
bootstrap efforts of the debtor countries, these efforts have basically done
little more than to postpone the time of reckoning.

Japan, for its part, is extending every possible support on this problem,
including participating in the Paris Club of creditor nations, going along with
the international private bank consortiums' reschedulings, and cooperating
through the IMF and other international organizations.

5. Western Europe

A. Relations with Western Europe, a major pillar of Japanese foreign policy
alongside relations with the United States and China ever since the Meiji
Restoration of 1868, were temporarily interrupted for a period after the war.
Following this hiatus, relations between Japan and the countries of Western
Europe were restored with the coming into force of the San Francisco Peace
Treaty in April 1952. However, the immediate Japanese foreign policy focus was
on relations with the United States, and there was no major progress seen in
relations with Western Europe.

B. Relations between Japan and Western Europe grew steadily closer in the
1960s centering on economic relations. In addition to the signing of the Treaty
of Commerce and Navigation with the United Kingdom and the Treaty of Commerce
with France, the early 1960s also saw the initiation of regular foreign
ministers' meetings with the leading West European countries of the United
Kingdom, France, West Germany, and Italy. Likewise, Japan's joining the OECD and
becoming an IMF Article VIII nation in 1964 were milestone events marking
Japan's acceptance as an industrial nation on a par with the countries of
Western Europe.

C. Japan-Western Europe relations grew much closer centering on economic
issues in the 1960s and early 1970s, and the Emperor's September 1971 visit to
Europe was symbolic of the postwar restoration of relations between Japan and
Western Europe.

While economic friction arose between Japan and Western Europe in the 1970s,
this same decade saw a sharp increase in top-level exchanges with Europe as
epitomized by the visits to Japan by such West European dignitaries as Britain's
Prime Minister Heath in 1972 and Italy's Prime Minister Andreotti in 1973 and
the 1973 visit to Europe by Prime Minister Tanaka and Foreign Minister Ohira.
Japan's participation in the economic summit meetings begun in 1975 is worth
mentioning for its significance in consolidating Japan's position as a Western
industrialized nation.

D. While Japan's relations with the countries of Western Europe were friendly
enough, they were not, at least until the late 1970s, such as to facilitate
cooperation on international political issues of importance.

However, as Japan became an increasingly important member of the
international community, it became increasingly crucial that Japan and Western
Europe cooperate in dealing with international political issues of mutual
concern, including such issues as the Afghan problem in 1979, the Polish problem
in 1980 and beyond, and the stepped-up Soviet deployment of SS-20s in the
late 1970s and early 1980's, and efforts were made on both sides to strengthen
the political dialogue between Japan and Western Europe.

E. Japan and the West European countries share the basic values of freedom,
democracy, and free-market economy with the United States and the other
industrialized democracies, and we also share a great responsibility for world
peace and prosperity in today's harsh international climate.

There has been increasing awareness of this in both Japan and Western Europe
as the contacts between them have grown closer, and Japan-Western Europe
cooperation has developed considerable momentum in recent years, particularly in
the political field.

In January 1983, shortly after the inauguration of the Nakasone Administration,
Foreign Minister Abe set Western Europe as the site of his first overseas trip,
demonstrating with this action the importance which Japan places on its
relations with the countries of Western Europe. Based upon this awareness,
political consultations have since been initiated between the Foreign Ministers
of Japan and the country serving as president of the European Economic Communities
in order to facilitate close exchanges of views between Japan and Western
Europe, the third such meeting being held with the French Foreign Minister in
Paris in May 1984 and the fourth with the Irish Foreign Minister in New York in
September. The institutionalization of these consultations is drawing
considerable attention as a major step forward in the political dialogue between
Japan and Western Europe.

The same sort of increased contacts and stronger cooperation are also seen in
Japan's relations with the other (non-EEC) countries of Western Europe. With
the Scandinavian countries, for example, the traditional relations centered on
trade and economic issues are being supplemented by greater personal contacts
and momentum is building for closer contacts including political dialogue and
cooperation. Visitors from the Scandinavian countries included King Olav of
Norway in 1983, President Koivisto of Finland in a 1985 stopover, and King
Gustaf of Sweden in March 1985, while Japanese visitors to Scandinavia included
Crown Prince Akihito and Princess Michiko in June 1985 and Foreign Minister Abe
to Finland in April as the first Japanese foreign minister ever to visit Finland
and to Norway in April and Sweden in June, the first time the Japanese foreign
minister has visited either Norway or Sweden in twenty years.

F. In the Statement at Williamsburg in June 1983, Japan agreed with the other
participating countries that Western security is indivisible and must be
approached on a global basis. This statement was highly regarded by the West
European countries as demonstrating Japan's joint stance on Western security as
a whole, and it became an important factor in promoting subsequent cooperative
relations between Japan and Western Europe.

Subsequently, a Declaration on Democratic Values was adopted at the London
Summit in June 1984 emphasizing the importance of freedom and democracy and a
Political Declaration on the 40th Anniversary of the End of the Second World War
was adopted at the Bonn Summit in May 1985. both of these documents are evidence
of the determination of the participating countries to transcend past
differences and to go forth in forward-looking cooperation to maintain world
peace and stability in the shared commitment to the common values of freedom and
democracy, and these are very significant landmarks in marking a new era for
Japan in postwar international politics.

G. Having a shared interest in maintaining and strengthening the free trading
system, Japan and the West European countries have worked together in the OECD,
the industrialized nations' summit meetings, and other forums to stem the tide
of protectionism. However, with Japan's massive trade imbalance with the West
European countries and the high unemployment in many European countries, the
trade imbalance is a still a cause of tension between Japan and the West
European countries, and protectionist moves are sometimes seen in Europe.

Nevertheless, there is increasing recognition in Europe of the importance of
Japan-Europe relations, and, reflecting the momentum toward closer political
cooperation between Japan and Western Europe, efforts were made in the 1980s to
overcome the tension over the trade imbalance and to improve and develop Japan-Europe
economic relations. This was especially notable with the holding of the First
Japan-EC Ministerial Meeting, where the atmosphere has shifted from one of
confrontation and friction to one of dialogue and cooperation. In line with this
trend, the Japan-EC Trade Expansion Committee was established to seek means
for expanding the two-way trade between Japan and the EC, and this Committee
held its first meeting in late February 1985.

The expansion of cooperation in the economic sphere and the growing number of
forums for dialogue are highly significant for consultation on economic issues,
and Japan is now expected to take measures on the trade imbalance problem.

6. The Soviet Union and Eastern Europe

A. Relations between Japan and the Soviet Union have made progress at the
working level in a wide range of economic, trade, cultural, and other fields
since the 1956 signing of the Joint Declaration and the resumption of relations.
In trade, for example, the two-way trade was $3.9 billion in 1984 as Japan
continued to be an important Western trading partner for the Soviet Union. In
Siberian development, four cooperative projects have already gone onstream and
three more projects are under way (coal mining in Southern Yakutia, exploration
and drilling for oil and gas on the Sakhalin continental shelf, and the third
Far East forestry resources development project). Total credits extended to the
Soviet Union in connection with cooperative Siberian development projects comes
to $2.5 billion as of the end of 1984.

On the other hand, despite this progress in working-level relations, the
Northern Territories problem, the largest pending issue between Japan and the
Soviet Union in the postwar period, remains unresolved and the illegal
occupation of these Territories by the Soviet Union continues, even though there
have been a number of twists and turns along the way.

To briefly review the history of negotiations between Japan and the Soviet
Union over the Northern Territories, the Soviet Union agreed in the 1956 Joint
Declaration that it would hand over the Habomai Islands and Shikotan Island
following the conclusion of a peace treaty between Japan and the Soviet Union
and that it would continue to pursue negotiations toward such a peace treaty.
However, with 1960's signing of the revised Treaty of Mutual Cooperation and
Security between Japan and the United States, the Soviet Union unilaterally
announced the entirely new precondition that all foreign military forces must
withdraw from all Japanese territory before it would hand over the Habomai
Islands and Shikotan Island.

Following this, the Soviet Union has argued (e.g., in a 1961 letter from
General Secretary Khrushchev) that the territorial question has been settled by
virtue of various international agreements, and the Soviet line grew steadily
harder. However, when Prime Minister Tanaka went to the Soviet Union in 1973 and
talked with General Secretary Brezhnev, it was confirmed, after heated
discussion, that the issue of the Northern Territories should be settled with
the conclusion of a peace treaty and that it remains a pending postwar question.

Despite this history, the Soviet Union began arguing in the late 1970s that
Japan's territorial claim to these islands was a groundless and illegal claim
being put forth at the instigation of outside influences; reverted to the
position that the territorial issues has been solved or does not exist; and
shows no willingness whatever to come to the negotiating table.

The government of Japan has consistently taken a position of trying to
resolve the Northern Territories problem and conclude the peace treaty and hence
to establish stable relations based upon true mutual understanding between Japan
and the Soviet Union. Japan has taken every opportunity to convey this
fundamental position to the Soviet Union, and it is imperative that Japan
continue to negotiate tenaciously with the Soviet Union on this issue.

Reflecting the harsh climate in East-West relations and with the Northern
Territories problem not only unresolved but exacerbated by the strengthening of
Soviet military forces in the Northern Territories, relations between Japan
and the Soviet Union have been strained in recent years. At the same time, it
must also be admitted that the rash of international incidents, including the
Soviet invasion of Afghanistan, the problem in Poland, and the downing of the
Korean Airlines jetliner, has done much to turn Japanese public opinion against
the Soviet Union.

Given these circumstances, it is important not only for averting mindless misunderstanding but also for moving closer to a solution to
the Northern Territories problem and other basic problems facing Japan and the
Soviet Union that Japan work to promote greater exchanges of views through
dialogue and negotiation with the Soviet Union, saying what must be said and
standing firm on matters of principle. From this perspective, Japan has taken the
initiative since 1984 in opening up new channels of communication with the Soviet
Union. With the development of dialogue between Japan and the Soviet Union,
attention is focused on what the Soviet Union will do under the Gorbachev
Administration inaugurated in March 1985.

B. Eastern Europe

a. The Warsaw Pact
Countries

i. Although the exigencies of the international situation meant that
relations between Japan and the six Warsaw Pact countries (Bulgaria,
Czechoslovakia,
East Germany, Hungary, Poland, and Romania) were suspended after the war,
relations were gradually reestablished with these countries (established in the
case of East Germany) beginning with the 1957 restoration of relations with
Poland and Czechoslovakia. Since then, relations between Japan and the countries
of Eastern Europe have developed steadily despite the differences in social and
political systems.

ii. In addition to the foreign ministers of all six countries, the heads of state of Bulgaria, Czechoslovakia, East Germany, and
Romania and as
well as the prime ministers of Bulgaria, Czechoslovakia, and Poland have visited
Japan. From the Japanese side; Crown Prince Akihito and Princess Michiko visited
Bulgaria and Romania in the Emperor's stead in 1979, Japanese foreign ministers
have visited all of the six countries, and there have also been active visits to
Eastern Europe by Diet members, including the programs arranged by the
parliamentarian friendship leagues.

iii. The relationship has also developed in
the economic sphere, as Japan's total two-way trade with the East European
countries grew rapidly in the 1970s, increasing from only $7.5 million in 1958 to
$915 million in 1984.

In addition, there has also been active and broad-based cultural exchange, centered on the activities of the Japan Foundation, as the
East European countries take pride in their rich cultural heritages and have
shown
great appreciation of Japanese culture.

iv. Moving closer to the West whether in
hopes of easing East-West tensions or for economic reasons, the countries of
Eastern Europe have developed increasing expectations of stronger economic
relations with Japan. With careful consideration of each country's circumstances
and policies, Japan is working to further promote its friendly relations with
the
countries of Eastern Europe.

b. Other East European Countries

i. Japan has
promoted friendly relations with Yugoslavia ever since the restoration of
diplomatic relations in 1952. Visitors to Yugoslavia from Japan include Crown
Prince Akihito and Princess Michiko in 1976 in the Emperor's stead to repay
President Tito's earlier visit to Japan, Prime Minister Ohira in 1980 to attend
President Tito's funeral, Foreign Minister Ohira in 1973, and Foreign Minister
Abe in 1983, and visitors to Japan from Yugoslavia have included President Tito
in 1968 and visits by the foreign minister and other people. Having a high
regard for Yugoslavia's foreign policy stance of independence and non-alignment,
Japan
intends to continue to work to strengthen relations with Yugoslavia.

ii. Relations with Albania were restored in 1981 and continue good.

c. Diplomatic
Efforts in 1984

Japan is continuing to promote firm relations with the Warsaw Pact countries in a broad range of fields. Knowing that Poland has
massive external debts, Japan has negotiated with Poland, in coordination with
the other Western countries, for rescheduling repayments of its governmental
debts
in light of the situation following the lifting of martial law in July 1983. At
the same time, Japan, like the other Western countries, has agreed to
rescheduling the governmental debts of Yugoslavia, a country that adheres firmly
to independence and non-alignment.

7. Middle East

A. Relations between Japan and
the Middle East were relatively distant for geographical and historical reasons
before the war, Japan maintaining only eight diplomatic missions in the area (as
opposed to 24 today) including the Embassy in Turkey and the Legations in
Afghanistan, Iran, Iraq, and Egypt.

Many of the countries of the Middle East
became independent following the war, and Japan has gradually established
diplomatic relations with these countries. As Japan moved from postwar
recovery to rapid growth, it became a major importer of oil from Iran, Saudi
Arabia, and other Middle East countries.

B. It was only after the third Arab-Israeli
war (1967) that Japan became deeply concerned about the issue of peace in the
Middle East. Then serving as Chairman of the United Nations Security Council,
Japan (although yielding the Chairmanship to Britain mid-way through) played major role in coordinating international opinion for the adoption
of Security
Council Resolution 242, which even today provides a basic framework for settling
the conflict in the Middle East.

C. Yet it was only when the Arab oil-exporting
countries used their petroleum as a political weapon at the time of the fourth
Arab-Israeli war in 1973 that Japan gave its full attention to the issue of
peace in the Middle East and realized how essential this region is for Japan.
With the use of oil for political purposes, it became clear that this conflict in
the Middle East, a major source of the world's oil supplies and even now
purveyor
of over 70% of Japan's total oil imports, had a major impact on the Japanese
economy. Both because of the realization of Japan's dependence on Middle East oil
and out of a sense of international justice, the Japanese public became broadly
aware of the need for a prompt and peaceful settlement in the Middle East.

D. Along with this change in Japanese attitudes, moves were also made to step up the
exchange of dignitaries with the Middle East countries, beginning with the visit
by Deputy Prime Minister Miki as special envoy in 1973 and followed by Crown
Prince Akihito and Princess Michiko in 1976 and again in 1981, Prime Minister
Fukuda in 1978, Foreign Minister Kimura in 1974, Foreign Minister Sonoda in 1978,
Foreign Minister Abe in 1983, and numerous other Cabinet members and private
business leaders, and there were also frequent visits by heads of state and other
Middle East dignitaries to Japan to strengthen mutual understanding and friendship.

Economic
relations with the Middle East were also expanded. With the rapid increase in
Japanese exports since the oil crises, the situation has changed from a one-sided
Japanese dependence to one of mutual dependence as Japan is now a leading source
of import products for the Middle East countries.

E. Because Japan has not been
deeply involved in the Middle East in the past, it is now in a position to speak
out fairly and objectively. Making the most of this position, Japan has sought to
contribute to peace and stability in the Middle East by conveying its policy
stance to the parties directly involved in the conflict, as well as to the United
States and other countries which can play a major role in the settlement of this
conflict, and has sought through economic and technical cooperation to
contribute to the people's welfare and the economic and social development of
the countries concerned.

F. With the improved mutual understanding and the
enhanced interdependence in a broad range of fields, the countries concerned
are coming to harbor increasing expectations for a Japanese political role in
the Middle East. Under the circumstances, it is imperative that Japan, while
working to build still-closer relations with the countries of the Middle East in all fields, play a positive role for the
attainment of peace and stability in the region.

G. Japanese efforts, for example, to create a climate
conducive to the prompt and peaceful solution of the Iran-Iraq conflict are
highly appreciated as one manifestation of this positive Japanese foreign
policy stance. For the future, it is imperative that Japan take advantage of its
having channels for political dialogue with both Iran and Iraq to tena-ciously
promote
this effort and seek to maintain and strengthen the trust and good bilateral
relations it enjoys with both Iran and Iraq. With all due understanding for the
positions of the two parties to the conflict, it is also important that Japan
seek to promote dialogue with the other countries concerned and with the United
Nations and other international organizations.

8. Africa (South of the Sahara)

A. There are now 45 independent countries south of the Sahara, and,
constituting approximately one-third of the total United Nations membership,
they are an important force in international affairs. Africa is also important to
the world economy and trade for its abundant natural resources, including rare
metals. In seeking to fulfill its international responsibilities in today's
increasingly interdependent world, Japan has been promoting personal exchanges
and cultural relations with the African countries to enhance mutual understanding
and has been extending economic and technical cooperation in a wide range of
fields to contribute to their top-priority imperative of economic and social
development.

B. Japanese relations with the countries of Africa were necessarily very
sparse and limited before the war in that Africa is geographically distant from Japan and most of Africa was under colonial domination by the
West European powers.

After the war, there was a quickening of the momentum for
self-determination and independence in Africa, especially from the late 1950s
through the 1960s (the single year 1960, for example, seeing a rush of 17 newly independent African countries in what was truly the Year
of Africa).
Japan has welcomed and recognized these newly independent countries.

C. Since
then, Japan, a country with no political designs whatever on the African
continent and a country respecting the historical and cultural heritages as well
as the foreign policies of the countries there, has steadily strengthened its
ties with the countries of Africa in such fields as personal exchanges, economic
cooperation, trade, and cultural relations. Much of the credit for these closer
relations must go both to Japan's improved international status and to the
striking improvement in Africa's status in the international community as the
African nations worked through the Organization for African Unity founded in 1963
and other forums to do away with colonialism and to promote intra-regional
unity and solidarity.

D. Prominent among the important Japanese visitors to Africa
as part of the active personal contacts were Crown Prince Akihito and Princess
Michiko, who visited Ethiopia in 1960 and have more recently gone to Africa in two consecutive years, to Kenya, Tanzania, and Zambia in
1983 and to
Senegal and Zaire in 1984. Leading Japanese government officials to visit Africa
for frank exchanges of views with the leaders there were Foreign Minister Kimura
to four African countries in 1974, Foreign Minister Sonoda to five African
countries in 1979, and Foreign Minister Abe to the two African countries of
Zambia and Ethiopia in 1984. The Parliamentary Vice Minister for Foreign Affairs
has also visited Africa every year since 1981 to strengthen Japan's relations of
friendship and cooperation with the countries of the continent.

Going the other
way, there have also been increasing numbers of African dignitaries visiting
Japan, including the heads of state of Madagascar in 1964, Ethiopia in 1970,
Zaire in 1971, Senegal in 1979, Zambia in 1980, Tanzania in 1981, Kenya in 1982,
and Gabon in 1984 as guests of the government as well as many Cabinet-level and
other leaders.

E. Japanese economic cooperation with the countries of Africa had been
relatively minor because of geographical and historical reasons, but there have been increasing expectations on the part of the African countries
as Japan has become economically stronger, and Japan has stepped up its economic
cooperation for the African countries' nation-building efforts. Both in the
interests of preserving international peace and stability and out of humanitarian
concerns, there has recently been an especially sharp increase in Japanese economic cooperation to those African
countries facing massive external debt
burdens, slow economic growth, food shortages, and other economic difficulties.
As a result, Japanese bilateral Official Development Assistance to the countries
of Africa has risen from only 1% of the total in 1972 to 11% in 1983.

F. Although
trade between Japan and the African countries expanded steadily in the first half
of the 1970s, it has recently stagnated because of, inter alia, the grave
economic difficulties faced by the African countries. In 1984, Japanese exports
to the African countries totaled $4.0 billion and imports $2.6 billion, meaning
that trade with Africa was 2.3% of Japanese exports and 1.9% of Japanese
imports.

Japanese government economic missions were sent to Africa in 1970 and
again in 1978 to promote stronger economic relations with the countries there,
and this effort was continued with the 1984 dispatch of a government economic mission to try to break the recent impasse
in economic relations with the
countries of Africa.

G. In 1984, the very serious drought-caused food shortages
in Africa drew particular notice from the international community. The United Nations,
other international organizations, and the industrialized countries sharply
increased their support for the countries of Africa last year. Japan was among
the leaders with stepped up foodstuff assistance, Foreign Minister Abe's visit to
drought-stricken areas in Ethiopia, and his appeals for stronger domestic and
international assistance.

Within this context, the Africa Month events held in
Japan in the fall of 1984 played a major role in enhancing popular interest in
and understanding for the situation in Africa and promoting Japan's relations
with
the countries of Africa overall. Sparked by Africa Month, there has been a wide
range of governmental and private-sector efforts at all levels in support of
Africa, including the Campaign for Sending Blankets to Africa in December.